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Why Most Customer Loyalty Programs Miss the Mark
There's a fine art to coming up with a killer loyalty program – one that eludes most businesses. While the average individual may shop regularly with dozens of brands, most participate in no more than 50% of the schemes they're presented with.
The whole thing becomes even more problematic when you consider how consumers are becoming increasingly less likely to stay loyal to specific retailers. According to a recent study carried out in the US, the number of people who say they stick fast with retailers they like has fallen from 79% to 60% since last year.
But why is it that in a world where even the smallest of freebies is more than welcome, people are turning their backs on what should be a good deal?
For the most part, it comes down to three things:
- Uninspiring Rewards – Either that, or rewards that are largely inaccessible unless you spend a fortune in a short space of time.
- Mass Marketing – The prospect of being bombarded with endless emails, postal flyers and other communications is often enough to take the shine off the whole deal.
- Generic Incentives – Each time you're offered something you have absolutely no interest in or need for, it confirms the retailer neither understands nor appreciates you.
Each of the above can make consumers believe that the whole “value exchange” of the program isn’t worth it. So not only will they happily pass it up, they also won’t think twice about taking their business elsewhere.
On the plus side, these are also the insights that serve as a blueprint for more effective customer loyalty programs. Just as there are three main sticking points in the minds of consumers, turning around a lacklustre program is also a three-step process:
Step 1: Personalisation and Relevance
Research conducted by McKinsey suggests that while 71% of shoppers expect personalised and therefore relevant offers, 76% lose faith in brands when it doesn’t happen. If you collect any data at all about your customers (which you do), it can and should be used to tailor the incentives you offer them – right down to the finest detail.
Step 2: Make it Easy
Complicated loyalty programs are of no interest to anyone. Convoluted enrolment systems, they need to spend a fortune to get little to nothing back in return, strict time limits on rewards, incomprehensible terms and conditions – all guaranteed to send them in the wrong direction. The whole thing should be as simple and seamless as it gets – shop with us and we’ll give you this, no strings attached.
Step 3: Level Up Your Customer Service
In the age of all things AI, the personal touch from real human beings never mattered more. This means direct human contact with your most important customers, direct (and reliable) channels of communication for those who have questions, and making the effort to make them feel appreciated beyond the tangible incentives you offer.
Simply put – switch roles with your most valued customers, consider what would make you stay loyal to your brand, and give them as much of it as you can possibly afford to.